scm relationships - class2

Mayuresh Unde

20th August, 2011

Supply Chain Relationships

Relationship Perspectives

Arm’s Length

Collaborative Strategic

Vendor Partner Strategic Alliance

TRANSACTIONAL

RELATIONAL

Process Model for forming Supply Chain Relationships

Ability to Invest

ExpertiseStrategic

Fit

Area of Core Competency

Partnership Model:a. Drivers: Compelling

reasons to partnerb. Facilitators: Supportive

factors that enhance partnership and development

Types of Collaboration

Supplier

Manufacturer

Distributor

Retailer

Supplier # 1

Manufacturer # 1

Distributor # 1

Retailer # 1

Supplier # 2

Manufacturer # 2

Distributor #2

Retailer # 2

Vertical Collaboration Horizontal Collaboration

Collaboration occurs when companies work together for mutual benefit

Types of Collaboration

Supplier # 1

Manufacturer # 1

Distributor # 1

Retailer # 1

Supplier # 2

Manufacturer # 2

Distributor #2

Retailer # 2

Full Collaboration

Supply Chain Collaboration Spectrum

6Source: Cohen & Roussel

Number of Relationships

Exte

nt

of

Co

llab

ora

tio

n

Many Few

Limited

Extensive

TransactionalCollaboration

SynchronizedCollaboration

CooperativeCollaboration

CoordinatedCollaboration

Not Viable

Low Return

• The green arrow describes increasing complexity and sophistication of:

– Information systems

– Systems infrastructure

– Decision support systems

– Planning mechanisms

– Information sharing

– Process understanding

• Higher levels of collaboration imply the need for both trading partners to have equivalent (or close) levels of supply chain maturity

• Synchronized collaboration demands joint planning, R&D and sharing of information and processing models

– Movement to real-time customer demand information throughout the supply chain

Benefits of Supply Chain Collaboration

CUSTOMERS MATERIAL SUPPLIERS SERVICE

SUPPLIERS

• Reduced inventory

• Increased revenue

• Lower order management costs

• Higher Gross Margin

• Better forecast accuracy

• Better allocation of promotional budgets

• Reduced inventory

• Lower warehousing costs

• Lower material acquisition costs

• Fewer stockout conditions

• Lower freight costs

• Faster and more reliable delivery

• Lower capital costs

• Reduced depreciation

• Lower fixed costs

• Improved customer service

• More efficient use of human resources

Thank You!

Q & A